OD30 
68 


UC-NRLF 


Q    2   b72    TQl 


^Ae 


^tey 


^f/iii/e^'ii^f^y^  yo/' 


6' 


•^^^i/^a^' 


7 


CTV.  .y^UTJ'^:^^  ^^^^^^^^i-^^ 


e^rt3 


V.J> 


FOREIGN  RELATIONS  AND  OVERSEA 

TRADE 


Addiesi  before 


The  Southern  Commercial  Congress 
Muskogee,  Oklahoma,  April  30th,  1915 


by 


WILLARD/STRAIGHT. 

repretenTing  the 

National  Foteign  Trade  Council. 


NEW  YORK 

1915 


FOREIGN  RELATIONS  AND  OVERSEA 

TRADE 


Address  before 


The  Southern  Commercial  Congress 
Muskogee,  Oklahoma,  April  30th,  1915 


WILLARD  STRAIGHT. 

■"     1 
representing  the 

National  Foreign  Trade  Council. 


NEW  YORK 
1915 


HEMRV  MORS£  '>rtPHEN» 


r 


FOREIGN   RELATIONS   AND  OVERSEA  TRADE 


Address  before  the  Southern  Commercial  Congress,  Muskogee,  Oklahoma, 
April  30th,  1915,  by  Mr.  Willard  Straight,  representing  the  National  Foreign 

Trade  Council. 


As  good  Americans  and  businessmen,  you  will  agree  that 
we  wish  to  preserve  friendly  relations  with  all  the  world  and 
increase  our  foreign  trade.  Taking  this  for  granted,  how  may 
we  best  realize  our  desires?  Having  once  determined  what 
you  want,  you  set  about  to  get  it.  The  most  effective  method, 
you  will  admit,  is  to  study  your  problem,  anticipate  probable 
and  possible  difficulties,  and  make  your  plans  accordingly. 
You  take  stock  of  your  own  abilities,  remedy  your  deficiencies 
where  you  can,  and  with  preparations  complete  embark  upon 
your  enterprise.     This,  Gentlemen,  is  my  text. 

I  have  already  expressed  to  Dr.  Owens,  your  genial  and  able 
Managing  Director,  and  through  him  to  your  Governing 
Board,  my  appreciation  of  their  invitation  to  be  present  on 
this  occasion.  They  and  you  have  done  me  great  honor  in 
permitting  me  to  address  you.  It  is  a  privilege  to  be  here, 
and  an  opportunity.  History  is  in  the  making.  Gentlemen, 
and  the  mills  of  the  Gods  are  not  only  grinding  exceeding 
small,  but  exceeding  fast  at  the  present  time.  Our  position 
in  world  affairs  may  be  very  largely  determined  by  the  course 
which  we  now  follow.  We  have  reached  the  period  in  which, 
as  Bismarck  prophesied  many  years  ago,  we  are  to  undergo 
the  real  test  of  the  American  Democracy.  Our  broad  lands 
are  rapidly  being  filled.  The  period  of  exploitation  is  past. 
The  age  upon  which  we  are  entering  will  be  one  of  conserva- 


596879 


^ 


-  tion,  of  co-operation,  of  the  international  division  of  labor. 
The  various  elements  in  our  national  life  must  be  co-ordinated 
to  serve  a  common  and  national  end.  Our  exports  of 
raw  material  in  normal  times  no  longer  wholly  suffice  to 
pay  for  our  imports  from  abroad.  Our  domestic  consump- 
tion of  foodstuffs  and  other  raw  products  grows  larger  each 
year,  and  we  are  in  consequence  increasingly  interested  in  the 
„  selling  of  our  manufactured  goods  to  maintain  our  trade 
balance.  A  trade  opportunity  brings  with  it  a  diplomatic  re- 
sponsibility. The  extension  of  this  foreign  trade,  which  we  so 
urgently  require,  is  in  no  small  measure  dependent  upon  the 

\^  conduct  of  our  foreign  relations.  I  shall,  therefor,  if  you 
will  permit  me,  call  to  your  attention  certain  facts — not  upon 
the  assumption  that  you  are  unfamiliar  therewith,  but  in  the 
hope  that  an  attempt  to  show  the  interaction  of  diplomacy 

""'  and  foreign  trade  may  be  of  interest. 

The  progress  of  the  world  has  been  marked  by  the  discovery 
and  co-ordination  of  forces  whose  existence  and  mutual  bearing 
had  been  previously  unsuspected.  Just  as  Science  has  demon- 
strated synthetic  relationships  of  which  we  had  been  uncon- 
scious, so  the  war  which  is  now  devastating  Europe  has  made  us 
suddenly  aware  that  we  are  not  after  all  isolated  from  the  rest 
of  the  world,  or  by  any  means  independent  of  each  other. 
You  gentlemen  of  the  South  who  saw  a  bumper  cotton  crop 
held  up  by  the  closure  of  your  European  markets,  have  been 
made  very  keenly  alive  to  this  situation.  The  Eastern  bankers 
who  relied  upon  your  annual  shipments  to  meet  the  drain 
of  funds  caused  by  tourists  expenditure  in  Europe  and  interest 
falling  due  on  American  securities  held  abroad,  moreover, 
found  themselves  greatly  embarrassed  by  your — which  has 
also  been  their — ^predicament.  The  war,  in  fact,  has  X-rayed 
the  body  pohtic,  and  shown  to  us  the  deUcately  adjusted, 
closely  articulated  commercial  and  financial  structure  which 
sustains  the  vastly  diversified  business  of  our  country. 
Our  premises  then  rest  on  the  following  facts:  We  wish 


to,  because  we  must,  develop  our  foreign  trade.    This  devel-     — -  S 
opment  to  be  permanently  successful  must  be  accompanied  by  > 

a  more  general  understanding  of  the  importance  of  foreign 
relations.    Like  our  overseas  trade,  our  diplomatic  policy  there-  \ 

fore  affects  no  one  section  of  the  country  and  no  one  phase  of  "^    / 
our  national  life,  but  is  directly  or  indirectly  the  concern  of        ' 
the  whole  country  and  all  the  people.     With  this  statement 
I  believe  you  will  agree.     That  being  the  case  what  are  we     / 
going  to  do  about  it?  J 

Our  attention  at  the  present  time,  insofar  as  it  is  not  con-  (J  ^^ 
fined  to  our  own  immediate  affairs,  is  very  largely  concen- 
trated on  the  trenches  in  Western  Europe,  on  the  battlefields 
of  East  Prussia,  on  the  operations  in  the  Dardanelles,  and  on 
the  diplomatic  correspondence  which  our  Government  has 
been  exchanging  with  the  various  belligerents.  This  is  natural. 
The  true  significance  of  these  events,  however,  lies  not  in  their 
present  military  interest,  but  in  the  probable  'effect  of  the 
forces  now  in  conflict,  and  of  the  forces  which  this  war  has 
called  into  being,  upon  the  political  and  economic  future.  The 
clash  has  been  long  inevitable,  and  its  result  for  some  years  at 
least,  we  hope,  will  be  decisive.  It  is  this  result  consecrated 
on  a  hundred  battlefields — not  the  battles  themselves,  that 
will  affect  the  United  States.  Our  commercial  genius  and  our 
statesmanship  therefore  must  understand  the  present  and 
the  past  in  order  intelligently  to  anticipate  the  future. 

The  struggles  which  marked  the  close  of  the  eighteenth  and 
the  beginning  of  the  nineteenth  centuries  were  the  military 
climax  of  a  ferment  which  bred  our  own  and  the  French 
Revolution,  and  which  found  renewed  expression  in  the  events 
of  1830  and  1848.  Despite  the  period  of  reaction  which  im- 
mediately followed  the  Congress  of  Vienna,  the  Napoleonic  wars 
had  sealed  the  fate  of  absolute  monarchy  and  marked  the  begin- 
ning of  constitutional  government  in  Central  Europe.  We  are 
now  witnessing  a  continuation  of  the  same  conflict,  which  is  as  old 
as  history  and  will  persist  when  we  are  gone.  It  is  in  its  present 
manifestation  an  issue  between  a  paternalism  of  which  militar- 
ism is  but  a  phase,  and  democracy;  between  two  conceptions  of 


4 

the  State  as  the  master  or  as  the  servant  of  the  people.  For 
us  it  is  vitally  important  to  observe  that  Democracy  to  meet 
Paternalism  is  adopting  of  its  own  volition  the  centralized 
national  organization  which  Paternalism  has  imposed.  Both 
England  and  France,  like  Germany,  are  no  longer  armed 
nations,  but  nations  in  arms.  Every  interest  in  German 
national  life  has  been  co-ordinated  under  Government  con- 
trol. It  is  the  remarkable  efficiency  of  this  administrative 
machinery  which  has  enabled  her  to  stand  the  crucial  test  so 
well.  The  military  and  naval  establishments  are  but  one 
portion  of  a  complex  system  which  enables  the  State  to  gather 
copper  from  the  village  kitchens,  administer  the  grain  supply, 
order  the  conservation  of  potato-peelings  and  the  slaughter 
of  pigs  which  might  otherwise  consume  the  cereal  needed  for 
the  food  of  the  people. 

To-day  the  French  and  British  democracies  are  themselves 
constructing  similar  mechanisms,  not  as  yet  so  elaborate,  but 
effective  in  meeting  each  situation  as  it  may  arise.  Railway 
and  steamship  lines  are  in  effect  under  Government  control. 
A  series  of  measures,  brilliant  alike  in  conception  and  execu- 
tion, have  not  only  enabled  the  British  banking  system  to 
withstand  the  sudden  shock  of  war,  but  have  kept  the  London 
discount  market  open  for  financing  Great  Britain's  foreign 
trade.  War  loans  have  been  issued  in  England  and  France, 
as  well  as  Germany,  to  an  amount  which  almost  staggers  the 
imagination,  and  arrangements  have  been  made  between  the 
Finance  Ministers  of  Great  Britain,  Russia  and  France  for 
a  joint  policy  by  which  the  three  great  Allied  Govern- 
ments will  meet  their  own  problems  and  jointly  assist  in 
financing  some  of  their  weaker  fellows.  The  British  Treasury 
supervises  the  London,  the  French  Government  the  Paris, 
Stock  Exchange.  In  order  that  the  nation's  financial  resources 
may  be  conserved  for  the  prosecution  of  the  war  no  new 
foreign  loans  may  be  issued  in  London  without  the  special 
authorization  of  the  British  Treasury.  The  French  Govern- 
ment has  for  some  years  exercised  a  similar  power.     Besides 


extending  their  control  over  finance  and  transportation, 
the  European  Governments  have  in  many  cases  actually  as- 
sumed, or  been  empowered  to  assume,  the  direction  of  the 
manufacture  of  goods  required  for  the  war.  A  system  is 
being  developed  which  is  practically  the  organization  of 
labor  into  a  national  industrial  reserve  quite  as  important 
as  the  military  reserves  which  guard  lines  of  communication 
instead  of  actually  being  engaged  on  the  firing  line.  And 
now  further  to  increase  national  efficiency  the  sale  of  vodka 
and  absinthe  has  been  forbidden  in  Russia  and  France,  and 
prohibition  in  absolute  or  modified  form  is  advocated  in 
Great  Britain. 

These  steps  towards  the  socialization  of  the  State — not 
State  Socialism — once  taken  are  not  likely  to  be  retraced. 
The  value  of  co-operative  effort  will  be  conclusively  demon- 
strated and  will  be  as  valuable  in  the  readjustment  which  will 
follow  the  war  as  it  is  essential  to  its  successful  prosecution. 

When  the  war  is  over  there  may,  perhaps,  be  a  period  of 
political  reaction  and  of  financial  and  industrial  depression 
throughout  Europe.  Industry  must  absorb  again  the  men  who 
are  now  serving  in  the  field.  German  foreign  trade  will  be 
disorganized.  The  Russian  market  which  has  been  vitally 
important  will,  it  is  said,  be  closed  as  far  as  possible  to  German 
goods.  Great  Britain's  world  wide  commerce,  which  has  de- 
pended largely  upon  the  ability  of  the  London  market  to  finance 
the  foreign  consumer,  may  not  flourish  as  before,  because — for 
a  time  at  least — capital  will  be  required  at  home  and  may  not  be 
available  for  foreign  development.  Yet  this  dislocation  may  not 
be  attended  by  results  as  serious  as  some  suppose,  because 
the  output  of  the  factories  will  be  required  in  no  small  measure 
to  make  up  for  the  wastage  of  the  war.  The  whole  world, 
moreover — commercial  and  financial  at  least — has  been  in- 
volved in  the  present  crisis.  Where  all  are  affected  there  is 
a  greater  likelihood  that  some  common  measures  will  be  found 
gradually,  and  with  a  minimum  of  hardship,  to  meet  new 
conditions.     Therefore,    while  numberless  individuals  and  lo- 


calities  may  be  impoverished,  it  would  seem  likely  that  the 
world  as  a  whole,  though  it  will  suffer,  will  do  so  because 
developments  which  would  have  been  undertaken  will  not  now 
be  attempted,  rather  than  because  of  the  actual  destruction 
that  has  taken  place. 

From  the  American  point  of  view  the  most  important  result 
of  the  war  will  be  not  the  possible  temporary  financial,  com- 
mercial and  industrial  embarrassment  in  Europe,  but  the 
impetus  which  has  been  given  to  more  effective  national 
organization  in  Great  Britain  and  France,  as  well  as  in  Ger- 
many. There  will  be  a  new  Russia,  a  consolidated  Italy, 
disciplined  and  alert  States  in  the  Balkans  and  Scandinavia, 
and  Japan  self-confident  and  self-conscious  in  the  fulfillment 
of  her  Imperial  destiny. 

These  are  the  facts  by  which  we  will  be  confronted  and 
with  which  we  must  be'  prepared  to  deal.  What  is  our 
position? 

'  /  Following  the  outbreak  of  hostilities  in  Europe  in  August 
last,  we  ourselves  to  a  certain  extent  learned  the  value  and 
necessity  of  co-operation. 

Luckily  for  us,  the  Federal  Reserve  Board  had  been  ap- 
pointed before  the  crisis  came.  These  gentlemen  promptly 
mobilized  the  banking  interests  of  the  country.  A  syndi- 
cate took  care  of  the  New  York  City  debt.  The  so- 
called  gold  and  cotton  "  pools  "  were  formed  to  pay  what  we 
owed  abroad  and  to  look  after  the  interests  of  the  South. 
Then,  as  if  by  magic,  thanks  to  our  enormous  exports,  the 
situation  was  reversed.  Where  eight  months  ago  it  was  esti- 
mated that  we  owed  Europe  three  hundred  millions  of  dollars 
in  immediate  maturities,  it  is  claimed  that,  without  considering 
the  debit  against  us  because  of  foreign  holdings  of  American 
securities,  we  now  have  something  like  six  hundred  millions 
due  us  from  the  other  side,  i  The  dislocation  of  the  European 
exchanges,  moratoria,  and  the  urgent  necessities  of  our  mer- 
chants and  our  customers,  have  enabled  us,  under  the  provisions 


of  the  Federal  Reserve  Act  in  a  few  months  to  develop  a  dis- 
count market  which,  under  ordinary  circumstances,  would  have 
taken  us  a  much  longer  period  to  acquire.  Through  this  channel 
we  are  financing  shipments  of  goods  to  and  from  the  United  States. 
Our  access  to  European  capital  has  been  cut  off,  but  reserves 
heretofore  unavailable,  have  been  released  and  we  are  easily 
absorbing  such  American  securities  as  Europe  wishes  to  sell. 
At  the  same  time,  in  order  to  stabilize  exchange  we  are  stimu- 
lating and  facilitating  our  export  trade  by  granting  credits  to 
Europe  to  pay  for  goods  purchased  in  this  country.  For  the 
first  time  in  our  history  we  are  through  these  very  necessary 
operations  establishing  a  market  for  foreign  loans.  This  edu- 
cation of  our  public,  should  make  it  possible  for  our 
bankers  later  to  undertake  transactions  which,  by  encour- 
aging development  particularly  in  South  America,  and 
perhaps  in  Russia,  will  create  new  markets  for  American 
goods.  Thus  our  investors  in  addition  to  securing  a  satisfactory 
interest  return  will  be  utilizing  American  money  for  the  benefit 
of  American  industry. 

These  recent  developments  afford  an  assurance  that  what 
has  heretofore  been  the  most  serious  obstacle  to  the  extension 
of  our  foreign  trade,  is  now  in  a  fair  way  to  being  overcome. 
We  have  been  accustomed  to  finance  our  production.  We 
are  now  learning  to  finance  the  distribution  of  our  goods  through 
the  "  acceptance  "  and  sale  of  Bills  of  Exchange,  and  the  public, 
by  the  purchase  of  foreign  securities,  is  playing  its  part  in 
granting  the  credits  which  our  customers  require. 

The  perfection  of  our  selling  methods  abroad,  however,  is 
still  a  matter  demanding  careful  attention.  The  President,  in 
his  recent  address  before  the  United  States  Chamber  of  Com- 
merce at  Washington,  discussed  the  manner  in  which  our 
manufacturers  might  combine  in  selling  organizations  for  the 
promotion  of  their  export  business .  The  inhibition  placed  upon 
the  development  of  foreign  trade  by  the  Sherman  Law  and  the 
Clay  to  a  Bill  must  be  removed  if  American  industry  in  the 


8 

future  is  successfully  to  compete  with  the  foreign  combina- 
tions, which  have  been  and  will  be  developed.  This  is  a  prob- 
lem for  the  new  Federal  Trade  Commission  to  solve. 

There  is  also  the  question  of  transportation.  The  Gov- 
ernment Shipping  Bill  was  suggested  to  meet  a  temporary 
aggravation  of  a  situation  which  has  long  existed.  I  shall  not 
venture  an  opinion  as  to  whether  or  not  it  would  have  been 
successful.  One  thing,  however,  is  clear;  Transportation  is 
a  commodity  like  any  other.  In  our  industry  we  have  by  a 
protective  tariff  assured  a  certain  standard  of  living  to, the 
American  workman,  and  even  under  the  high  cost  imposed  by 
our  navigation  laws  we  have  been  able  to  operate  vessels  in 
the  coast-wise  trade  by  reserving  it  exclusively  for  American 
shipping.  But  this  is  impossible  in  foreign  trade  where  the 
business  of  selling  transportation  is  highly  competitive.  We 
may  be  able,  despite  our  high  labor  costs,  to  market  our 
manufactured  goods  abroad  because  the  efficiency  of  our  work- 
men and  the  labor-saving  devices  which  we  use  enable  us  to 
keep  down  the  cost  of  production.  But  in  shipping  not  only 
is  there  no  labor-saving  machinery,  but  our  navigation  laws 
make  it  necessary  for  American  ships  to  carry  larger  crews  than 
are  required  to  man  foreign  vesssels.  If  we  wish  to  transport 
our  goods  under  the  American,  rather  than  the  British  or  the 
German,  the  Dutch  or  the  Norwegian,  flag,  we  must  be  pre- 
pared to  furnish  transportation  at  competitive  prices.  This 
can  be  done  in  one  of  two  ways :  either  by  permitting  American 
shipowners  to  purchase  and  operate  vessels  on  the  same  basis 
as  their  competitors  as  to  the  cost  of  construction  and  labor 
charges;  or  by  empowering  the  Goverment  to  bear  the  difference 
between  the  cost  of  ships  and  labor  in  the  open  world  market 
and  the  cost  thereof  under  our  own  tariff  and  navigation  laws. 
Whether  the  Government  meets  this  cost  by  subsidy  or  by 
itself  bu3dng  or  building  ships  involves  the  question  of  public 
or  private  ownership,  not  the  charge  upon  the  taxpayer.  The 
difference  is  in  name,  not  in  substance,  for  subsidy — like 
Government   ownership — means  that   the    public    pays    the 


charges  which  are  imposed  in  the  interest  of  labor.  The  only 
difference  lies  in  the  fact  that  a  subsidy  might  encourage 
investment  in  a  business  which  has  not  heretofore  promised 
any  interest  return,  except  where,  as  has  frequently  been  done, 
American  owned  ships  are  operated  under  foreign  flags. 
If  the  American  people  desire  a  merchant  marine  and  desire 
at  the  same  time  to  insist  that  there  should  be  American 
officers  and  that  the  crews  should  have  certain  accommodations, 
certain  food,  and  be  in  sufficient  numbers  to  man  a  certain 
number  of  lifeboats,  the  American  people  will  have  to  pay — 
otherwise  the  business  will  be  done  under  flags  other  than  our 
own. 

The  financing  of  production  and  distribution,  selling 
organization  and  transportation  are  the  principal  direct  factors 
in  the  development  of  our  foreign  trade.  They  immediately 
concern  the  merchant  and  the  manufacturer,  the  farmer,  the 
banker  and  the  shipper,  as  well  as  the  laboring  man,  but 
under  our  form  of  administration  they  are  all  more  or  less 
dependent  upon  Government  action  or  subject  in  some 
measure  to  Government  control.  The  conduct  of  our  interna- 
tional relations,  however,  is  essentially  a  Governmental  function. 
It  is  in  reality  the  promotion  of  our  oversea  commerce  in  the 
most  comprehensive  sense,  and  may  be,  and  is,  performed 
in  numerous  ways,  the  variety  and  the  importance  of  all  of  which 
are  not  sufficiently  appreciated. 

One  of  the  most  striking  results  of  the  European  war 
already  apparent  has  been  the  strengthening  of  the  ties  be- 
tween the  United  Kingdom  and  her  Colonies.  Imperial  pref- 
erence was  first  discussed  after  the  bonds  of  Empire  had  been 
knit  close  by  the  strain  of  the  South  African  war.  It  would  seem 
not  at  all  improbable,  therefore,  that  this  matter  would  again  be 
taken  up  with  renewed  vigor.  Aside  from  sentimental  and  polit- 
ical considerations  the  fact  that  wages  in  England  have  already 
been*  increased— and  are  unlikely  to  be  greatly  reduced — and 
that  industry  must  be  assured  its  profits,  will  afford  an  added 
argument  for  some  form  of  Imperial  British  protective  tariff; 


^■^ 


10 

while  the  present  financial  co-operation  of  England,  France  and 
Russia,  moreover,  may  also  later  form  the  basis  for  a  customs 
understanding. 

We  have  regarded  the  tariff  primarily  as  a  source  of  revenue 
and  as  a  safeguard  and  stimulant  for  American  production. 
We  have  a  Reciprocity  Treaty  with  Cuba,  and  once  discussed 
a  similar  agreement  with  Canada.  The  provisions  of  the 
Underwood -Simmons  Act  contemplate  the  negotiation  of  trade 
agreements  subject  to  the  approval  of  Congress.  But  few  of 
us,  save  when  startled  by  threatened  reprisals,  have  been 
alive  to  the  possibilities  of  our  tariff  and  our  treaty-making 
power  as  diplomatic  instruments  in  the  development  of  our  for- 
eign trade.  There  are  certain  favors  which  we  can  grant  and  cer- 
tain things  which  we  ourselves  need.  The  negotiation  of  recip- 
rocal arrangements  should  be  facilitated  and  the  institution  of 
reprisals  made  possible.  The  creation  of  a  Tariff  Board  com- 
posed of  representatives  of  the  Departments  of  State,  the  Treas- 
ury, Commerce,  Justice,  and  Labor,  empowered  to  deal  with 
these  matters  may  before  very  long  be  found  to  be  necessary 
in  the  interests  of  American  commerce. 

We  are  generally  familiar  with  the  effective  work  per- 
formed by  our  Consular  officers,  and  the  ability  and  enthu- 
siasm which  the  Secretary  of  Commerce — Mr.  W.  C.  Red- 
z'  field — and  his  assistants  have  shown  in  the  task  of  extending 
^,Jv~  American  trade.  The  important  functions  and  the  very  real 
C  -  ^(h^  services  of  our  Embassies  and  Legations,  however,  are  ap- 
parently not  always  so  clearly  appreciated  or  understood.  It 
is  too  often  supposed  that  diplomacy  has  no  very  direct 
relation  with,  or  bearing  upon,  the  humdrum  affairs  of 
business  life.  In  the  minds  of  some  a  diplomat  is  a 
gentleman  in  a  top  hat  who  makes  himself  pleasant  to 
ladies  at  tea  parties.  There  are,  it  is  true,  countless  mat- 
ters of  routine  from  the  visaing  or  issue  of  passports  to  the 
presentation  of  ladies  at  Court.  Yet  even  these  details 
are  important,  for  they,  equally  with  matters  of  seemingly 
far  greater  moment,  affect  our  position  abroad.     The  work  is 


11 

definite  and  technical,  and  requires  trained  intelligence,  tact  and 
wide  knowledge  of  business  and  politics.  Diplomacy  is  not 
an  abstract  science  or  system  of  philosophy,  it  is  really  a 
Court  of  Equity  in  international  affairs  and  our  foreign  rela- 
tions are  but  the  aggregate  of  questions  in  one  way  or 
another  arising  from  our  oversea  commerce.  We  may  not 
approve  of  armed  intervention  in  the  affairs  of  another  nation 
to  enforce  American  claims.  Such  drastic  action,  on  our 
part,  however,  is  unnecessary  save  in  certain  cases,  fortunately 
extremely  rare,  where  general  conditions  rather  than  par- 
ticular interests  demand  the  restoration  of  law  and  order. 
All  legitimate  American  interests  abroad  whether  they  be 
those  of  the  missionary,  or  the  investor,  the  merchant  or 
the  ranchman,  are  entitled  to  diplomatic  protection  and 
support.  Unless  such  protection  and  support  are  assured, 
foreign  enterprise  becomes  a  speculation  and  not  an  invest- 
ment. It  will  attract  gamblers,  not  sound  business  men, 
for  the  confidence  which  security  begets  is  the  basis  of  all 
honest  trade.  For  this  protection  we  look  to  the  Department 
of  State  and  our  Embassies,  Legations  and  Consular  estab- 
lishments. They  it  is  who  must  safeguard  our  interests  in 
foreign  lands,  and  adjust  questions  which  may  arise  between 
citizens  of  our  country  and  the  Government  of  another,  or 
between  another  Government  and  our  own  in  the  develop- 
ment of  national  policies. 

We  in  this  country,  unfortunately,  have  been  too  prone  to  look 
upon  our  foreign  relations  as  a  sort  of  football  which  we  might 
kick  about  to  suit  the  whims  of  domestic  politics.  It  is  not  so 
many  years  ago  that  every  Fourth  of  July  orator  twisted  the 
lion's  tail  for  the  edification  of  his  auditors.  Our  isolation  made 
us  not  only  confident,  but  unmannerly,  in  what  we  considered 
to  be  our  immunity.  We  have  been  inclined  to  disregard  the 
facts  of  our  history.  For  this  inaccurate  teaching  and  mis- 
taken patriotism  have  been  largely  responsible.  But  surely 
true  patriotism  does  not  consist  in  plajdng  the  ostrich,  but  in 


,-'.'>- 


12 

recognizing,  in  order  to  deal  with,  even  disagreeable  facts. 
Otherwise  progress  becomes  impossible. 

One  hundred  years  ago  we  were  part  of  the  European  system. 
American  independence  was  but  a  collateral — though  tremend- 
ously important — result  of  the  wars  which  preceded  the  French 
Revolution.  We  passed  unscathed  through  the  Napoleonic 
Era,  and  emerged  essentially  uninjured  from  the  War  of  1812 — 
not  because  of  our  inherent  strength,  but  because  England, 
France  and  Spain  were  more  vitally  concerned  elsewhere.  In  the 
enunciation  of  the  Monroe  Doctrine,  which  we  like  to  consider 
particularly  our  own,  we  were  encouraged  by  a  British  Minis- 
ter, Canning.  He  sought,  not  so  much  to  safeguard  American 
liberty  as  to  assure  to  British  merchants  opportunities  for  South 
American  trade  by  preserving  that  region  from  the  domination 
of  the  Holy  Alliance.  In  China,  in  Africa,  in  India,  South 
America  and  Russia,  American  merchants  played  their  part 
in  the  adventurous  trading  of  the  first  half  of  the  nine- 
teenth century.  But  these  men,  like  our  statesmen  of  that 
time,  were  largely  guided,  or  at  least  affected,  by  the  influences 
which  dominated  or  agitated  Europe.  In  these  days  our 
oversea  commerce  was  essential  to  the  life  of  the  nation 
and  our  diplomacy  was  correspondingly  important.  During 
the  Civil  War  the  clipper  ships,  famous  the  world  over,  were 
driven  from  the  seas.  After  1865  we  concentrated  our 
energies  upon  reconstruction  in  the  South  and  the  opening 
of  the  West,  severing  our  more  intimate  relation  with  the  Con- 
tinental system  and  entering  upon  a  period  of  incubation 
when  we  gave  little  heed  to  our  foreign  trade  and  during  which 
our  di  lomacy  was  provincial.  In  this,  as  in  the  preceding  stage 
of  our  national  development,  we  were  secure  from  outside  inter- 
ference— not  so  much  because  of  our  ability  to  resist  aggression, 
as  because  of  our  geographical  position  and  the  pre-occupation 
of  the  Powers  across  the  Atlantic.  Even  in  1895  at  the  time 
of  the  Venezuelan  boundary  dispute.  Lord  Salisbury  anticipated 
the  coming  struggle  with  Germany  and  was  unwilling  to  clash 
with  the  United  States.     So  later,  when  Germany  endeavored 


13 

to  form  a  coalition  of  the  Powers  to  support  Spain,  Great 
Britain  refused  to  participate  and  held  the  field  clear  while  we 
occupied  Cuba  and  Porto  Rico  and  defeated  the  Spanish  fleet 
at  Manila  Bay.  It  would  be  humiliating  to  feel  that  we  could 
not,  if  called  upon  to  do  so,  defend  the  Monroe  Doctrine  against 
all  comers;  but  the  fact  remains  that  we  have  been  able  to  de- 
velop this,  practically  the  only  positive  principal  in  our  foreign 
policy,  chiefly  thanks  to  the  exigencies  of  European  politics. 
The  Monroe  Doctrine,  like  the  "  open  door  "  in  China,  has 
been  accepted  lest  any  interference  therewith  disturb  the 
delicately  adjusted  European  "  Balance  of  Power." 

This  "  Balance  of  Power  "  which  has  in  the  past  afforded  us 
our  protection  may,  when  this  war  is  over,  be  unbalanced  for 
sometime  to  come — for  one  side  or  the  other  will  probably  emerge 
victorious.  The  spirit  of  nationality  in  Europe  will  be  emphasized. 
Like  the  United  States  after  the  Civil  War,  when  we  induced 
England  to  pay  the  Alabama  claims — and  suggested  that  the 
forces  of  Napoleon  III  leave  Mexico — the  nations  which  have 
fought  may  be  more,  rather  than  less  belligerent:  they  may  be 
less  tolerant  of  argument  and  more  prone  to  action.  The 
strengthening  of  democracy  should  be  a  guarantee  for  the  pre- 
servation of  peace,  but  it  will  be  a  peace  in  which  our  friends 
across  the  water  will  be  active  and  aggressive,  rather  than 
charitable  and  considerate. 

Following  the  cessation  of  hostilities  in  Europe  there  will  be 
a  readjustment  in  world  affairs  unparalleled  in  history. 
The  future  of  Europe,  of  Asia,  and  Africa  will  be  settled  for  some 
time  to  come  and  it  is  inconceivable  that  the  Americas  will  not 
be  intimately  affected  by,  if  indeed  they  are  not  included  within 
the  scope  of,  this  forthcoming  international  congress. 

During  the  past  few  months  the  Administration  in  Wash- 
ington has  shown  tact,  judgment  and  sound  common  sense 
in  its  efforts  to  protect  our  neutral  commerce  from  bel- 
ligerent interference.  It  has  been  inevitable,  however,  that 
in  the  process  we  have,  by  the  very  correctness  of  our  position, 
provoked  bitter  criticism  in  the  European  press  and  amongst 


14 

the  peoples  at  war.  We  have  made  demands  which  they  have 
_  considered  unreasonable  and  which  they  may  not  readily  forget. 
\_,  We  are  apt  sometimes  to  be  blind  to  the  inconsistencies  in 

our  own  policy,  but  that  does  not  by  any  means  make 
them  invisible  to  others,  who  perhaps  may  be  quite  as 
unconscious  of  the  beam  in  their  own  eye  as  we  are  of  the  mote 
in  ours.  Imagine  for  an  instant  what  our  view  would  be  in 
case  American  lives  and  property  were  sacrificed  in,  say, 
China,  and  if  Japan  in  refusing  to  allow  us  to  secure  satisfaction 
from  the  Chinese  Gk)vernment,  was  unwilling  herself  to  take 
action.  As  we  would  have  others  do  to  us,  so  must  we  do  to 
them.  Therefore,  instead  of  being  too  vociferous  in  our  de- 
nunciation of  those  whom  we  feel  are  restricting  our  foreign 
business,  it  might  be  well  for  us  to  remember  that  during  the 
past  few  years  British,  French  and  German  property  has  been 
destroyed  in  Hayti,  Santo  Domingo  and  Mexico.  Under  the 
Monroe  Doctrine  we  assumed  a  benevolent  guardianship  over 
the  affairs  of  this  hemisphere.  We  have  been  granted  a  com- 
paratively free  hand  to  deal  with  these  questions  because 
European  rivalries  have  been  so  delicately  balanced  that  no 
power  dared  risk  dispersing  its  strength  in  an  American 
adventure.  On  the  conclusio^  of  hostilities,  however,  this 
situation  will  no  longer  exist.  We  may  take  it  for  granted 
that  we  too  shall  then  be  asked  for  an  accounting.  We  shall 
either  have  to  fulfil  or  forego  the  responsibilities  which  we 
have  in  the  eyes  of  the  world  at  least,  assumed  for  the  be- 
havior of  our  Southern  neighbors. 

You  may  feel,  perhaps,  that  in  raising  this  point  I  have  de- 
parted from  my  subject  and  entered  upon  a  discussion  of  a 
domestic  question  wholly  unconnected  with  our  foreign 
trade  or  our  general  foreign  relations.  If  so  I  cannot  agree 
with  you.  It  is  impossible  to  separate  such  matters  into 
watertight  compartments.  When  we  demand  that  Russia 
modify  her  domestic  policy  regarding  the  Jews  to  recognize 
American  passports  carried  by  our  Jewish  citizens,  we  cannot 
expect  Japan  and  China  cheerfully  to  acquiesce  in  our  exclusion 


15 

of  their  subjects  under  the  American  immigration  Laws.  We 
cannot  impose  our  will  upon  another  nation  in  Persia  and  expect 
consideration  and  hearty  co-operation  in  settling  a  dispute  in 
Peru.     We  cannot  isolate  problems  in  diplomacy  and  at  our    '~j    ' 

discretion  say  that  we  will  arbitrate  this  one  and  settle  that     ] 

one  as  we  may  deem  desirable.  We  cannot  eat  our  cake  and 
have  it. 

This  subject  is  referred  to  not  with  any  desire  to  criticize 
the  Administration  in  Washington,  which  inherited  and  did 
not  create  the  Mexican  problem.  If  we  have  shirked  what 
our  critics  consider  to  be  our  obvious  duties,  it  has  not  been 
so  much  the  fault  of  President  Wilson  or  Mr.  Bryan  as  it  has 
of  the  American  people  whom  they  represent.  We  are  a  Demo- 
cracy. The  very  nature  of  diplomacy  requires  constructive  ~j 
and  farsighted  leadership.  But  with  us  in  the  last  analysis 
it  must  conform  to  the  will  of  our  people,  and  our  foreign 
policy  will  be  intelligent  and  effective  or  otherwise  according 
to  the  public  understanding  or  ignorance  of  its  relation  to  our 
national  life. 

It  is,  therefore,  imperative  that  as  a  nation  we  should  now, 
while  we  have  yet  time,  set  our  house  in  order.  If  we  would 
avoid  embarrassments  for  the  future,  or  assume  fresh  responsi- 
bilities, our  present  obligations  must  be  recognized. 

It  is  foolish,  moreover,  for  us  now  to  talk  complacently  of  cap- 
turing British  and  German  trade,  because  Europe  is  at  war, 
and  because  the  Monroe  Doctrine  is  supposed  to  give  some  sort 
of  a  hjrpnotic  claim  to  the  profits  of  South  American  com- 
merce. We  hear  that  the  trade  of  the  world  will  be 
ours;  that  we  shall  supplant  London  as  the  world's  credit 
center.  But  we  should  remember  that  much  of  the  business 
.upon  which  we  are  now  engaged  is  directly  attributable  to 
the  war,  and  may  be  greatly  diminished  by  its  conclusion.  We 
should  not,  therefore,  be  lulled  to  a  happy  sleep  by  siren  songs. 
We  cannot  sit  down  and  wait  for  good  things  to  continue  to 
drop,  like  ripe  apples,  into  our  lap.  Once  the  war  is  over  it 
will  not  be  long  before  Europe,  commercially  and  industrially 


16 

better  organized  than  before,  will  aggressively  undertake  to 
recoup  itself  for  its  losses  by  extending  and  developing  its  foreign 
trade.  Interruption  in  European  exports  has  made  it  possible 
to  introduce  American  goods  where  heretofore  they  have  been 
denied  a  fair  trial,  but  any  advantages  which  we  may  now 
gain  will  be  temporary,  rather  than  permanent  in  character, 
unless  we  are  able  firmly  to  establish  ourselves  in  the  mar- 
kets which,  for  the  time  being,  are  opened. 

Our  ability  to  meet  the  test  will  depend  upon  the  quality 
and  prices  of  our  goods,  upon  the  facilities  for  financing  their 
distribution  and  upon  the  efficiency  of  our  selling  methods. 
The  activities  of  our  merchants  and  manufacturers  however 
must  be  encouraged  by  an  intelligent,  alert,  and  responsible 
diplomacy,  maintaining  increasingly  cordial  relations  with  the 
rest  of  the  world  with  which  we  desire  to  do  business. 

I  fear,  Gentlemen,  that  this  has  been  a  somewhat  rambling 
talk,  that  I  have  offered  no  concrete  suggestions  as  to  ways 
and  means  of  securing  foreign  trade.  I  have  certainly  not 
ventured  to  outline  a  diplomatic  policy  for  our  Government. 
But  you  are  interested  in  foreign  trade  development,  and  it 
is  the  inter-dependence  of  our  foreign  relations  and  our 
foreign  trade  that  I  have  endeavored  to  analyze— their 
mutual  relationship  that  I  have  attempted  to  make  clear. 
I  have  hoped,  by  describing  the  warp  and  woof,  to  give  an 
impression  of  the  fabric  as  a  whole,  and  to  show  that  the  prob- 
lems of  both  are  in  reality  the  same,  although  expressed, 
perhaps,  in  different  terms.  ^ 

To  sell  goods  abroad  it  is  necessary  to  understand  and 
satisfy  a  foreign  market.  To  cultivate  friendly  diplomatic  rela- 
tions it  is  essential  to  appreciate  and  sympathize  with  the  ideals 
and  aspirations  of  a  nation  other  than  our  own.  Diplomacy, 
like  trade,  is  largely  a  matter  of  square  dealing,  in  apprehend- 
ing and  adjusting  differences,  as  well  as  common  interests — in 
recognizing,  not  in  dodging,  facts.  Foreign  trade  and  diplo- 
macy, after  all,  are  like  most  other  human  relations.  The 
twin  keys  to  success  therein  are  courtesy  and  common  sense. 


17 

As  Southerners  and  as  businessmen,  you  are  endowed  with  the 
one,  and  know  the  value  of  the  other.  The  future  is  before 
us.  We  wish  to  share  the  profits  of  the  world's  trade,  and 
creditably  to  bear  our  responsibilities  in  the  world's  affairs. 
To  realize  these  aspirations  for  this  democracy  of  ours  we  must 
have  confidence  in  one  another,  understand  the  fundamental 
identity  of  our  interests  and  co-operate  for  a  common  end. 
The  essential  thing  is  to  see  our  problem  clearly  and,  to 
realize  its  bearing  upon  every  phase  of  our  national  life. 

Once  we  can  do  this,  you  know  and  I  know  that  we  shall 
succeed. 


RETURN  TO  the  circulation  desk  of  any 

University  of  California  Library 

or  to  the 

NORTHERN  REGIONAL  LIBRARY  FACILITY 
BIdg.  400,  Richmond  Field  Station 
University  of  California 
Richmond,  CA  94804-4698 

ALL  BOOKS  MAY  BE  RECALLED  AFTER  7  DAYS 
2-month  loans  may  be  renewed  by  calling 

(510)  642-6753 
1-year  loans  may  be  recharged  by  bringing  books 

to  NRLF 
Renewals    and    recharges    may    be    made   4   days 

prior  to  due  date 

DUE  AS  STAMPED  BELOW 


20.000(4/94) 


igw 


LD  21-95rn-7,'37 


U.  C.  BERKELEY  LIBRARIES 


CD^7fi3^^7l 


096879 


UNIVERSITY  OF  CAUFORNIA  LIBRARY 


